First time winner of the “Product of the Year” category, Ice-Fili, is the top ice cream producer in Russia. Recently, the company is experiencing tough competition by Nestlé and regional ice cream producers. Ice-Fili’s current problem is its loss in market share due to their poor quality decision-making after Russia became an open-market in 1992. Nestlé took advantage of Ice-Fili’s low reaction adjustment and is taking over their market. What should be Ice-Fili’s next move? To offer proper advice, an external and internal analysis should be conducted to analyze their environment.

Analysis

EXTERNAL ANALYSIS
An external analysis allows us to understand the ice cream industry. It includes analyzing Porter’s 5 forces and Ice-Fili’s key success factors in comparison to its competitors. Porter’s 5 Forces
1- Threat of New Entrants HighThe ice cream market is attractive due to its 15% to 20% profit margin and low initial capital investment. Ingredients are acquired at low cost because of their commodity nature. Also, the final product and production process are similar among producers. Products may be easily copied making differentiation difficult to obtain. It is easy to get through customers and retailers as numerous distribution channels available. 2- Bargaining Power of Suppliers Ingredients: Low & Equipment: High Identical ingredients may be purchased from numerous suppliers. Changing supplier may be done easily with a low switching cost. However, only 10 companies can provide the necessary equipment in Russia and some equipment is highly specialized making suppliers’ bargaining power high. 3- Bargaining Power of Buyer’s High

Customers may be indifferent when buying ice cream due to the low switching cost. Also, since ice cream is an impulse purchase; consumers may just opt for another snack instead. As for retailers, ice cream is easily produced giving rise to the opportunity for a generic brand.

4- Threat of Substitute Products HighIn Russia, ice cream is considered an inexpensive snack to consume “on-the-go” and may be replaced by other snacks such as soda, beer, yogurt, chocolate and confectionary candies. 5- Intensity of Rivalry Among Competitors High

Russia is Ice-Fili’s only target market. Therefore, there will be high rivalry against new entrants. Also, there are 300 ice cream producers and the industry has been experiencing a decrease of 3.5% in production increasing competition for market share. Key Success Factors

Ice-Fili has a competitive advantage due to their high quality products. They only use high-quality natural ingredients and no preservatives. Their production capacity is significantly bigger than other ice cream producers. Products are priced in the middle-level category and customers may choose from a wide range of products. Also, Ice-Fili has a good work environment and open and cooperative corporate culture. Referring to table 1, it is accurate to say that, if Ice-Fili does not step up their game, Nestlé will be the only brand in Russia in a couple of years. Table 1 | Ice-Fili | Nestlé |

INTERNAL ANALYSIS
Focusing on Ice-Fili’s core competencies with the use of the value chain and its financial position will allow us to have a better knowledge of the company’s capabilities. Value Chain Analysis
Ice-Fili’s core competencies are the quality of its products and...

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...Some 55 years later, the company was privatised and rechristened “Ice Fili”. Anatoliy Shamanov, an expert in the technical processes essential in the frozen food industry, joined the company in 1968. After six years of service he decided to further his expertise serving in a variety of other roles elsewhere in the frozen foods industry. He later retuned as CEO in 1988 and was inspirational in leading the company through the vast changes that ensued.
Ice Fili are Russia’s top ice cream producer so one could forgive Shamanov for being in a position of self-assurance having maintained a leading 5.2% share of the Russian ice cream market, arguably, against the odds considering international competition and economic circumstance.
Ice Fili have a strong position in the market but their relative differentiation and cost position left them ‘stuck in the middle’ with respect to some regional and multinational firms. It is clear from the financial statements that the years following the crisis of ‘98 took their toll as we see a steady decrease in sales. Ice cream consumption in Russia continues to grow by an average of 3.5% over past two years (2001-2002) indicating a steady market. However, in order to remain competitive in an increasingly competitive market it may now be the time to reassess the current business model and plan strategic direction for the future.
With the following...

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Introduction
Ice-Fili is a mid-sized and privatized joint-stock company in Russia. In 2002, it ranked as the top ice cream producer which offered 170 different ice cream products and had more than $25 million in sales. In addition, Ice-Fili’s flagship ice cream brand --“Lakomka” was responsible for 30% of the company’s sales. However, Ice-Fili has been losing its market share and experiencing a decrease in sales volume in recent years due to the increasingly competitive Russian ice cream market.
External Analysis
Life Cycle Stage
The Russian ice cream industry was in the growth stage after 1996, the ice cream consumption value had a huge increase from 222,000 tons in 1996 to around 376,000 tons in 2002. However, the industry reached the shakeout stage in 2002 since the demand for ice cream approached saturation level and the competition between companies became more intense (300 companies in 2002).
PEST Analysis
The table below shows how the macro-environmental factors influence the ice cream industry in Russia.
Political | - GOST: a minimum standard determining the ingredients and quality, which protected traditional Russian ice cream producers |
| - The Dissolution of the Soviet Union: state-run economy transferred to an open-market economy, which lowered entry barriers and lead to higher...

...the Five Forces Framework in the Russian Ice Cream Market
Although the Russian ice cream market may initially look attractive due to its consistent growth in ice cream production/demand in recent years, after evaluating the market through the five forces framework, it becomes clear that the market far from attractive.
Since the open market economy was first introduced to Russia in 1991, ice cream producer competition has more than tripled in sized to 300 firms by 2002. Significant funding would be required for ice cream manufacturing/distribution and a new entrant would also need to consider the market’s pre-existing loyalty to domestic brands. There is also a luxury tax associated with ice cream production, which negatively affects the potential for current and future profit.
While many foreign competitors exited the market during the economic crisis of 1998, the companies that remained presented significant competitive pressure and prowess. For instance, Nestlé leveraged their international brands and large advertising budget to “push” their products into distribution channels for the Russian consumer. Without Nestlé’s scale, a significantly smaller company would have difficulties competing in on the same advertising caliber.
There are various ice cream substitutes available to the Russian consumer including beer, soda, yogurts, chocolates, and other confectionery...

...ICE-FILI CASE
1 - How attractive is the Russian ice cream industry in 2002?
The main data about the attractiveness of this market are:
- The consumption is about 6 times lower than in France, Canada, US because of a different mode of consumption. Indeed, Russians consider Ice Cream as an “on the go” snack and not as a dessert they can have at home.
- producing in Russia implies a certain adaptability of recipes since traditional Russianice creams contain less fat and are made with natural ingredients plus one must take into account the high seasonality of consumption.
- While the demand for beer, soft drink and confectionary industries is increasing, the demand for ice cream and therefore its production keep on decreasing.
2 - What are the key trends affecting the attractiveness of the Russian ice-cream market over the next five years?
We chose to answer this question through the five forces analysis of Porter.
BARRIERS TO ENTRY: The ease with which a new business can enter the Russian Ice cream market is affected by: ¤ Product differentiation : Brands that entered the market earlier have an advantage as they already have loyal customers. It will cost a lot to a new brand to convince customer to choose their products instead of those he was used to buy. In another hand we can think that advertising expenses being very low, the brand differentiation is...

...Summary
As Russia’s largest domestic ice cream producer, they had held onto their market leadership for many years. However, increasing competition from foreign companies, along with the emergence of regional producers of ice cream led to Ice-Fili’s market share erosion in the recent years. Porter’s five forces model was the primary method to analyze Ice-Fili’s industry and its competitiveness in the industry. Segmentation analysis was used for further study of the ice cream industry in Russia. The analysis was carried on key variables like distribution channel, buying behavior, geographic locations, and product characteristics. Recommendation: Ice-Fili will need to focus on the strengthening of its distribution channel through various efforts including marketing and raising of capital while focusing on its long history and brand recognition. Above all, availability of its product to the consumers is the key to Ice-Fili’s success.
Porters Five Forces
Buyers are people or organizations who create demand in an industry. If buyers have significant bargaining power, industry returns can transfer to buyers in the form of lower prices. Buyer power is determined by various factors such as switching costs, the relative volume of purchases, the standardization of the product, elasticity of demand, brand identity, and quality of the products. Buyers are...

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Heat of Fusion
Heat of Fusion for Ice
Introduction:
This lab report is a step by step process in calculating the heat of fusion for ice and to compare the differences between salt added to room temperature water and salt added to icy water. To calculate heat of fusion, one must understand heat of fusion. Heat of fusion is the amount of heat required to convert a mass of a solid at its melting point into a liquid without an increase in temperature. As difficult as this may sound, this experiment can be carried out with minimal equipment. The following equipment was needed, a 100mL graduated cylinder, a calorimeter, a digital thermometer, a calculator, water, and ice cubes.
Procedure:
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...﻿Reading Assignment: Chronicles of Ice
Summary:
In Chronicles of Ice, Gretel Ehrlich sets out to “learn whatever lessons a glacier has to teach”, and to share what she has learned with us, as readers. The lesson the author relays to us is that the fate of the glacier is inextricably linked to that of the biological health of the Earth itself. Ehrlich uses the glacier as a device to show both cause and effect of the declining health of the Earth’s climate. The gases and particulate trapped in the ice provide the historical record of how industrialization has contributed to the rise in greenhouse gas levels and to the warming of the planet’s atmosphere and oceans. The resultant melting of glaciers, in turn, has far-ranging consequences for human populations across the globe. Ehrlich ends by contemplating if we, as a race, have the will power to change our ways in service of the planet’s well-being.
Four Important Points :
Glaciers, like the climate, are not static.
Glaciers are able to provide a historical record of industrializations effect on various aspects of climate.
The melting of glaciers can, and is, having a disastrous impact on human societies across the globe.
Up to this point, our actions have been driven by purely economic interest, but will this always be the case?
Text Structure:
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Signals That Lead the Reader:
No, the writer does not use subheadings.
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